In the Presence of a Negative Externality,a Specific Tax Can

question 91

Multiple Choice

In the presence of a negative externality,a specific tax can achieve the social optimum because

• A) output is reduced to zero as a result.
• B) it internalizes the external cost.
• C) it directly charges the producer for polluting.
• D) the price of the good rises by the full amount of the tax.

Evaluate the impact of rent control laws on the market.

Calculate the effects of a per-unit tax on market equilibrium, including the size of the tax and its distribution between buyers and sellers.

Understand the impact of a binding minimum wage on a labor market using supply and demand diagrams.

Analyze the effect of price elasticity of demand and supply on the burden of a tax.

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Definitions:

Investing Activity

Investing activity refers to the purchase or sale of long-term assets and investments, reflecting a company’s spending on acquiring and disposing of long-term assets.

Financing Activity

Transactions involving the flow of cash between a company and its owners, investors, or creditors, excluding operational and investing activities.

Statement of Cash Flows

A ledger statement which outlines how modifications in balance sheet accounts and revenue streams influence cash and cash equivalents, with the analysis broken down by operating, investing, and financing operations.

Parentheses

Punctuation marks used in writing to enclose additional information or clarify something without interrupting the main text.